Business Data Communications

Abstract

This article covers the two major aspects of business data communications: the network, including networking technology and communications services, and the business data communications applications that run on the network. The basics of wireless local area networks (WLANs) are reviewed along with the technology standards that are used to provide basic WLAN functionality. The use of supply chain systems as an emerging networked application is explained. In addition, the challenges of implementing and maintaining a global computer network are reviewed along with the various security problems that network managers must deal with in a wired world.

Overview

There are two major aspects of business data communications: the network, which includes networking technology and communications services, and the business data communications applications that run on the network. The technology to run computer networks includes servers, workstations, hubs, switches, and routers. Business applications that run on computer networks include e-mail, e-commerce, Websites, supply chain systems, and enterprise resource planning (ERP) business suites.

A computer network is the interconnection of computers and related equipment using wires or radio waves. Computer networks that serve users in a specific location such as company office or the floor of a building are local area networks (LANs). Networks that serve an entire city or community are metropolitan area networks (MANs), and networks that serve multiple cities or several states or countries are wide area networks (WANs). LANs generally comprise several types of equipment including:

• Workstations such as desktop computers or laptop computers used in business operations
• Servers that provide access to business applications and network support systems
• File servers that provide digital storage capabilities for end users or for enterprise applications
• Networked printers that provide printing services to users on a LAN
• E-mail servers that support the e-mail operations of an organization
• Hubs, which are the collection points for cabling that connects devices to the network
• Switches that help manage the flow of messages and data across the network
• Routers that provide connectivity between LANs and WANs

Network Operating Systems. Computer networks require a network operating system (NOS) just as an individual computer requires an operating system. A NOS is the computer program that manages the network and allows network administrators to create usernames and provide users access to networked computing resources. A NOS also provides the basic security for the network and enables communication between the computers on the LAN and computers on other networks via communications over the Internet. Corporate access to WANs, private data networks, or the Internet requires a connection from a network service provider or Internet service provider (ISP).

Communications Protocols. Business data communications over the Internet are made possible by a variety of communications protocols. A protocol is a structured process that controls and enables various types of data communications. The Transmission Control Protocol and Internet Protocol (TCP/IP) are the primary protocols that support the communications process on the Internet. The File Transfer Protocol (FTP), as another example, supports the movement of files from one computer to another. The ever-popular activity of Web surfing is supported by the Hypertext Transfer Protocol (HTTP), which enables the operation of the Web browser and allows users to visit websites around the world. The related protocol HTTPS relies on a combination of HTTP and a secure socket layer or transport layer security in order to allow users to visit and interact with secure websites, such as those used in online banking and commerce.

Wireless Systems. The technology that supports business data communications has been moving away from networks built with cables and wires to wireless systems. This has occurred in part because of the convergence of computing technology and cellular telephone technology. The modern cell phone, in addition to enabling wireless voice connections, can provide access to e-mail, web pages, and text messages. Laptops and tablets can connect to the Internet via a wireless connection from almost anywhere and be used much like a desktop computer that is connected to an office LAN with a cable.

In addition, the office LAN, which traditionally required cables to connect computers together, can be created with wireless technology. The National Institute of Standards and Technology (NIST) suggest four primary benefits from Wireless Local Area Network (WLAN) installation (Karygiannis & Owens, 2002):

• User mobility
• Rapid installation of the network
• Flexibility in relocating the network
• Scalability of the network (Drew, 2003).

A WLAN is a flexible data communication system most often set up as an extension of a wired LAN. “Electromagnetic waves transmit and receive data over the air, minimizing the need for wired connections. With the help of WLANs, corporations and students at universities can use wireless connectivity to facilitate access to necessary information” and services using laptops or handheld devices (Malladi & Agrawal, 2002, p. 146).

In 1997, an important event that contributed to the growth of wireless LANs was the creation of the IEEE 802.11 standard. The Institute of Electrical and Electronics Engineers (IEEE) is a “professional organization of engineers, scientists, and students,” which sets standards for networking and computing. The “802.11 standard sets the protocols used between a wireless client (user's device) and a base station (access point) or between two wireless clients” (Drew, 2003, p. 102).

Another wireless networking standard is Bluetooth. The problem with using Bluetooth has been its limited physical range and bandwidth; however, both have been growing—Bluetooth 4.0 has a range of up to about 300 feet and a bandwidth of 25 Mbps. Bluetooth has been designed primarily to connect various wireless devices together and supports functions like synchronizing a laptop or cell phone and headset.

Applications

Supply Chains Are Built on Business Data Communications. Data business communication plays a key role in the modern supply chain system by supporting business-to-business (B2B) applications. Supply chain management systems (SCMS) are digitally enabled inter-firm processes that integrate information flow, physical flow, and financial flow. Such systems require reliable networks capable of spanning the globe.

A supply chain is a network of organizations with specialized activities that work together, usually in a sequential manner, to produce, distribute, sell, and service goods. Supply chain systems “support entire networks of manufacturers and distributors, transportation and logistics firms, banks, insurance companies, brokers, warehouses and freight forwarders, all directly or indirectly attempting to make sure the right goods and services are available at the right price, where and when the customers want them” (Kumar, 2001, p. 58).

Once the goods or services are delivered, the chain does not end. “At the front end, through delivery, installation, customer education, help desks, maintenance, or repair, the goods or services are made useful to the customer. At the end of the product life, reverse logistics can ensure that used and discarded products are disassembled, brought back, and where possible, recycled” (Kumar, 2001, p. 58).

Traditional strategic thinking had always focused on individual firms as the competitive unit in any industry. The individual company created, stored, processed, and analyzed data all produced within the company itself (Kumar, 2001). In a supply chain environment, “the competitive success of a firm is no longer a function of its individual efforts-it depends, to a great extent, on how well the entire supply chain, as compared to competing supply chains, is able to deliver value to the ultimate consumers” (p. 58). Consequently, business data communication has evolved from providing communications within a firm to supporting communications throughout the companies up and down the supply chain (Kumar, 2001).

Research indicates that a firm's IT-based platform capabilities have a substantial effect on supply chain process integration. This capability is deeply embedded into the structure of inter-firm operational processes, such as order processing, inventory management, logistics, and distribution; financial processes, such as billing and receivables management; and information processes, such as demand planning and forecasting.

Implementation of IT-based supply chain management systems has been shown to have a positive effect on procurement of materials for production as well as distribution, marketing, and sales after production (Richardson, 2006). The integration associated with these processes is achieved through a variety of initiatives that may include trading partner agreements and supply chain partnerships and even deep embedding IT capabilities. The development of process integration capability based on an IT infrastructure requires expertise that spans the business process domain, partnership context, IT, and data communications (Rai, Patnayakuni & Seth, 2006).

Challenges in Going Global with Data Communications. The growth of supply chain systems shows that globalization is essential to the long-run competitive success of corporations around the world. Managing a global organization requires the ability to communicate between and coordinate the activities of geographically dispersed units. Such communication requires a data communications network that can span the globe. A global computer network can provide both internal and external benefits to an organization. Internally, a global network can facilitate communications among subunits, thereby improving management control. It can also save time by speeding up the exchange of data and can reduce clerical costs by eliminating the need to re-enter data. Indeed, global networks can provide significant cost savings and operating efficiencies.

In the early 1990s, research showed that the technical problems associated with global networks involved both quality of services and compatibility issues. The quality of telecommunications services outside of major industrialized countries was often much lower. Indeed, the data transmission capabilities of most telephone services in non-industrial countries were often considered so poor as to preclude the establishment of a global network.

Historical obstacles to building global data communications network included requirements to purchase country-specific equipment and the frequent necessity to process data locally before sending it across national borders. There were also many restrictions on the use of satellites, which limited flexibility in establishing private networks. In addition, many companies were not prepared to deal with local laws that impacted access to flat-rate leased lines and data flow across national borders (Steinbart & Nath, 1992).

By the year 2000, the common perception was that because of the growth of the Internet, data communications capabilities had indeed been globalized. However, managing a global data communications network remains a challenge that requires both technical skills and global experience. Compared with data communications that occur within national borders, international data communications efforts encounter “more difficulties due to differences in the international technological infrastructure, network systems, culture, government regulations, and the level of technological and economic development” (Lai & Chung, 2002, p. 89).

Network Efficiency. A survey of network managers conducted in 2001 showed that many technical and legal issues remained unresolved. At the top of the list of issues is managing the operational efficiency of networks. As technology improves, some countries are quick to upgrade to newer faster systems while many countries stay well behind the curve. Thus, network managers most often deal with multiple protocols, standards, and architectures.

Regulatory Barriers. Managing a global data communications network in an environment of diverse international telecommunication regulations is also a challenge. In many countries, public telecommunications authorities were formed to control telecommunication networks and establish communication regulations to protect or to subsidize national interests. Very often, significant funds and effort need to be devoted to resolve these regulatory barriers (Lai & Chung, 2002).

Security. Controlling data communication security is also still a significant challenge. International networks may give hackers more chances to compromise corporate networks and misuse data than national networks. The tools that can be used to secure communications and data are also not universally available because of export restrictions on the latest security and encryption technology from the United States and other industrialized countries. According to Lai and Chung (2002), the top 20 issues facing network managers are:

• Improving the operational efficiency of networks
• Dealing with different networks
• Managing international telecommunication regulations
• Managing international integration of technologies
• Controlling data communication security
• Reconciling national differences
• Dealing with trans-border data flow restrictions
• Managing network infrastructure across countries
• Handling international politics
• Dealing with international tariff structures
• Conforming to international protocol standards
• Measuring the effectiveness of communications
• Dealing with telecommunication deregulation
• Managing international information systems
• Managing telecommunication professionals
• Managing existing network management software
• Planning international communications
• Seeking international vendor support
• Managing international data communications funding level
• Hiring network professionals (p. 90).

New & Improved Technology for Global Data Communications. In the realm of global business data communications, things continue to change and do so rapidly. Satellites and fiber optics lines have dominated the technologies developed by the global telecommunications industry for communications across oceans. According to Warf (2006), firms engaged in “international traffic (e.g., multinational corporations, financial institutions, and telephone and television companies) frequently employ both technologies, often simultaneously; either in the form of leased circuits from shared corporate networks constructed by consortia or leased time from satellite companies” (p. 2).

To meet demand, “public and private satellite firms compete to provide international telecommunications service, the vast majority of which originate in economically developed countries. Competition between satellites and fiber optics reflects the rapid expansion of demand for international telecommunications. The steady growth of multinational corporations, global business travelers, international tourism, mounting transcontinental telephony, and cross-border sales of television shows, all have greatly expanded the markets for carriers and has ushered in new opportunities” (Warf, 2006, p. 2).

Bandwidth in both satellites and fiber optics carriers has grown significantly. However, because the vast majority of capacity enhancement has occurred in fiber, and many users have switched to fiber. Fiber optics consequently came to dominate the business. Warf explains that,

“The explosive growth of fiber cable systems in many parts of the world has led to enormous increases in transmission capacity, a glut in supply, and severe price deflation. Geographically, the transatlantic and transpacific markets remain the most important for international telecommunications, although the last ten years have also witnessed faster growth in Latin America and Asia” (2006, p. 10).

Even though their transmission costs have greatly declined, satellites have not matched the superior leaps of fiber optics capacity. The vast majority of all international telecommunications is transmitted via submarine cables. Satellite providers have been steadily pushed into serving markets in low-density and thus low-profit regions. Some observers maintain that the long-standing rivalry between satellite and fiber optics may draw to a close as some firms experiment with hybrid service delivery (Warf, 2006). Hybrid data service includes onsite, or physical, data centers at one's place of business combined with cloud storage, popular among many start-ups and tech companies, but gaining popularity in the general marketplace.

Issue

Security Threats to Business Data Communication. As the growth of data communications continues, security matters have become increasingly important. In particular, “the development of high-speed packet data communications over air interfaces and their folding into the overall converged networks present an ever increasing set of security issues-both for major network providers and for enterprise information technology environments” (Bertine, Faynberg & Lu, 2003).

Causes of Security Threats. There are many reasons why malicious code attacks are successful, including:

• Flaws in software design
• Vulnerabilities caused by insecure system and network configurations
• Social engineering methods used by attackers
• Human error and unaware computer users
• Persistence on the part of hackers, thieves, and spies (Erbschloe, 2004, p. 8).

Individuals that Pose Threats. According to law enforcement and security experts around the world, the threat to computer systems and networks is rapidly increasing. The “number and types of individuals who pose a threat has also increased and the skill level required to attack systems has declined” (Erbschloe, 2004, p. 1). The FBI attributes the increase in hacking events and malicious code attacks to several sources including:

• Criminal groups that have increased the use of cyber intrusions for purposes of monetary gain
• Foreign intelligence services who use cyber tools as part of their information gathering and espionage activities
• Hackers who break into networks for the thrill of the challenge or for bragging rights in the hacker community. This activity once required a fair amount of skill or computer knowledge, but individuals can now download easy to use attack scripts and protocols from the Internet and launch them against victim sites.
• Hacktivists who are politically motivated in their attacks on publicly accessible Web pages or e-mail servers.
• Information warfare specialists supported by several nations that are aggressively working to develop information warfare doctrine, programs, and capabilities
• Insiders who are disgruntled and who have become a principal source of computer crimes because their knowledge of a victim system often allows them to gain unrestricted access to cause damage to the system or to steal system data.
• Malicious code writers who are posing an increasingly serious threat (Erbschloe, 2004, pp. 1–2).

Consequences of Computer Crimes. The economic consequences of computer crimes that involve malicious code attacks, unauthorized intrusion into networks and computer systems, denial-of-service (DOS) attacks, or distributed denial-of-service (DDOS) attacks are substantial. Even less serious types of attacks can have real consequences and even “undermine public confidence in Web-based commerce and violate privacy or property rights. An attack on a Web site that closes down an e-commerce site can have disastrous consequences for a Web-based business. An intrusion that results in the theft of millions of credit-card numbers from an on-line vendor can result in significant financial loss and, more broadly, reduce consumers' willingness to engage in e-commerce” (Erbschloe, 2004, p. 4).

Internet-based attacks are more common on the unencrypted HTTP protocol than on secure HTTPS websites, and retail is a particularly sector (Kerner, 2015). Nevertheless, security problems with HTTPS, such as lack of cookie verification from browsers, can leave vulnerabilities that hackers may exploit (Constantin, 2015).

Understanding the costs associated with malicious code attacks and the impact that attacks can have on their organization enables managers to make decisions as to how much to invest in counter measures. Although the methodology required to track time expenditures and corresponding cost for an organization is straightforward, many organizations are unsure how to measure a decline in productivity that results from a malicious code attack. Decreases in productivity of employees or delays in order processing or customer service responses can be tracked and calculated by department managers (Erbschloe, 2004, p. 6). The consequences of a malicious code attack can also be understood in terms of the time line of the attack:

• Immediate economic impact can include damage to systems that requires human intervention to repair or replace, disruption of business operations, and delays in transactions and cash flow.
• Short-term economic impact can include loss of contracts with other organizations in supply chains, the loss of retail sales, negative impact on an organization's reputation, and hindrance to developing new business.
• Long-term economic impact can include a decline in market valuation, erosion of investor confidence, decline in stock price, and reduced goodwill value (Erbschloe, 2004, pp. 6–7).

Conclusion

A computer network is the interconnection of computers and related equipment using wires or radio waves. The technology to run computer networks includes servers, workstations, hubs, switches, and routers. Business applications that run on computer networks include e-mail, e-commerce, Websites, supply chain systems, and enterprise resource planning (ERP) business suites. Computer networks require a network operating system (NOS) just as an individual computer requires an operating system. A NOS is the computer program that manages the computer network and allows network administrators to create user names and provide users access to networked computing resources.

A wireless LAN (WLAN) is a flexible data communication system implemented as an extension to a wired LAN. Electromagnetic waves transmit and receive data over the air, minimizing the need for wired connections (Malladi & Agrawal, 2002, p. 146). In 1997, an important event that contributed to the growth of wireless LANs was the creation of the IEEE 802.11 standard. The Institute of Electrical and Electronics Engineers (IEEE) is a “professional organization of engineers, scientists, and students,” which sets standards for networking and computing. The “802.11 standard sets the protocols used between a wireless client (user's device) and a base station (access point) or between two wireless clients” (Drew, 2003, p. 102).

Data business communication plays a key role in the modern supply chain system by supporting business-to-business (B2B) applications. Supply chain management systems (SCMS) are digitally enabled inter-firm processes that integrate information flow, physical flow, and financial flow. A supply chain is a network of organizations with specialized activities that work together, usually in a sequential manner, to produce, distribute, sell, and service goods.

Historical obstacles to building a global data communications network included requirements to purchase country specific equipment and the frequent necessity to process data locally before sending it across national borders. There have also been many restrictions on the use of satellites, which limited flexibility in establishing private networks. In addition, many companies were not prepared to deal with local laws that impacted access to flat-rate leased lines and data flow across national borders.

As the growth of data communications continues, security matters have become increasingly important. In particular, “the development of high-speed packet data communications over air interfaces and their folding into the overall converged networks present an ever increasing set of security issues-both for major network providers and for enterprise information technology environments” (Bertine, Faynberg & Lu, 2003).

Terms & Concepts

Business-To-Business (B2B) Applications: Applications software that supports interaction and transactions between businesses including supply chain systems, order entry and processing and collaboration on design or fulfillment requirements.

Business Data Communications: The use of applications software to support business activities that require the transfer of digital or analog data over computer networks.

Denial of Service Attacks: Remotely controlled attacks against domain names or websites that flood the domains with traffic and thus disallow legitimate users access to resources.

Local Area Networks (LANs): Computer networks designed to serve a group of users in a specific area such as a floor of a building or an office complex.

Metropolitan Area Networks (MANs): Computer networks designed to connect multiple computers (users) in a city or closely located cities.

Network Operating System (NOS): The computer programs that enable networks to function and that provide administrators the ability to assign user names, user rights, and control access to resources on a local area network.

Supply Chain Management Systems: Applications software that is integrated into a communications network that enables organizations to communicate about and support their purchasing, sales, and shipping needs.

Wide Area Networks (WANs): Computer networks that span cities, states, or countries that are connected to Internet backbones that allow users to communicate around the world.

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Suggested Reading

Al-Naamany, A. & Bourdoucen, H. (2005). TCP congestion control approach for improving network services. Journal of Network & Systems Management, 13, 1–6. Retrieved August 29, 2007, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=17177415&site=ehost-live

Bakken, D., & Iniewski, K. (2014). Smart grids: Clouds, communications, open source, and automation. Boca Raton, FL: CRC Press.

Balyan, A., Loganathan, K. & Sripathi, S. (2006). Security architecture for IP-based multi-service networks. Bell Labs Technical Journal, 11, 59–78. Retrieved August 29, 2007, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=20877377&site=ehost-live

Britton, E. & Tavs, J. (1995). TCP/IP: The next generation. IBM Systems Journal, 34, 452. Retrieved August 29, 2007, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=9510136882&site=ehost-live

Oppliger, R. (2007). IT security: In search of the holy grail. Communications of the ACM, 50, 96-98. Retrieved August 29, 2007, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=23875848&site=ehost-live

Panko, R. R., & Panko, J. L. (2015). Business data networks and security, global edition. 10th ed. Boston, MA: Pearson. Retrieved December 28, 2016, from EBSCO online database eBooks Collection (EBSCOhost). http://search.ebscohost.com/login.aspx?direct=true&db=nlebk&AN=1419293&site=ehost-live

Xia, J., Vangala, S., Wu, J., Gao, L. & Kwiat, K. (2006). Effective worm detection for various scan techniques. Journal of Computer Security, 14, 359–387. Retrieved August 29, 2007, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=22976132&site=ehost-live